REEEP

Biomass co-firing potential in China

China, 27.08.2007 - Dr. Marianne Osterkorn

Shandong, a province of Eastern China, is richly endowed. Three new nuclear power plants are planned for the province, while China Light and Power, a major Hong Kong-based energy company, owns a wind farm and numerous coal-fired power stations in the area and is planning more. In 2004, 1500 of the province’s farms accounted for 25% of the entire nation’s exports of grain, fruit, vegetables and other agricultural produce grown over 2 million hectares. Some of those farms could find themselves selling their waste product to power stations if the country’s first dedicated biomass plant starts operating soon, as hoped. Like most of the rest of the country, Shandong is a beehive that wants to buzz more.

Some government officials and environmentalists, alarmed by this rapid growth, are seeking to add another ingredient to this hyper-activity: straw.  Straw is already used locally for paper making but it could instead be blown into the furnaces at coal-fired power stations, putting a brake on the nation’s fossil fuel use and creating added income for farmers.  It is an idea that has already been tried and tested in Europe, the USA and other parts of the world, but which has yet to be pioneered in China. 

“Co-firing simply hasn’t really happened yet,” says Rachel Child, an executive at energy consultancy ESD funded by the Renewable Energy and Energy Efficiency Partnership (REEEP) to determine a path for biomass co-firing to become a reality in China. Ironically investment costs are lower than for many other alternatives, however biomass co-firing has still been neglected. 

Dedicated biomass power, on the other hand, has happened, and a number of these plants have sprouted across the country, thanks to a preferential tariff for the power produced from these plants.  “There is an enormous amount of interest in biomass in China,” says Child. Examples of co-firing, which can be a cheaper solution, exist in just a few provinces and only in Shandong province has a co-fired plant been supported financially by the provincial government. 

This lack of interest is not due to a shortage of resources; straw is plentiful across the country. According to ESD’s study, carried out in conjunction with China’s Center for Renewable Energy Development (CRED), at least 70,000,000 tonnes of unused surplus straw is burned each year. In addition, large amounts currently used for fertilising, paper-making or other purposes are potentially available as feedstock for power stations.

Horizontal integration

Yet in China the relationship between farmers and power station managers is polarised - perhaps even more extremely so than in other countries. They are not used to working together.  As in other countries, it has been hard to make a new horizontal incision into a vertically integrated industrial infrastructure – yet that is essential for a well-functioning biomass-to-energy industry.

Power station managers operate large assets dependent on enormous bulks of coal (600 million tonnes burned in 2004) supplied via a large, established network. In China, farming is a family business. In 2004, the nation produced almost as much in food crops that it burned coal - 469 million tonnes - but most of its farms are smallholdings less than half a hectare in size producing 4 tonnes of straw each. The total output of agricultural straw amounted to 680 million tonnes - the energy equivalent of 338 million tonnes of coal - and 376 million tonnes were available for use as energy.  The number of farms dwarfs the number of coal-fired power stations – and there are just five major companies in the Chinese power sector compared to millions of farmers.

Since logistical resources have been marshalled to meet the food production and export business, it follows that the same could be done for the energy business.  “What it needs is a dedicated supply company handling this issue,” suggests Child following ESD and CRED’s year-long investigation.  But the supply issue is a delicate one. A poor harvest could mean a sudden fall in feedstock, and competition for straw from a new industry could raise prices.

Lower capital costs

Not surprisingly Shandong is the home to one of China’s first co-firing plants.  It is an enterprising state, and one of the country’s main producers of straw.  Some aspects of adapting an existing power station to a co-firing facility are cost-effective when compared to costs of a dedicated biomass power plant.  “Investment costs are pretty low for these plants. They need storage for the biomass, but the overall capital expenditure is much lower than building a new dedicated biomass plant of an equivalent capacity,” explains Child.

Smaller power stations of less than 50MW capacity are easier to adapt because often they do not use pulverised fuel and in addition there is less of a feedstock infrastructure problem due to their size. As some of these are supposed to be closed soon by the government, ESD and CRED reckons co-firing could help extend their life, thus possibly ushering in a new co-firing or biomass culture.

Raising the bar

But the future holds promise nevertheless, if only because of the breadth of the government’s vision. “China has set very ambitious targets, and there’s a growing recognition of renewable energy in the whole mix,” says Hu Runqing from CRED . China’s recently launched National Climate Change Programme sets a target of supplying 10% of the country’s primary energy from renewables by 2010 and in setting this goal plans to move faster than many developed economies. According to ESD and CRED, co-firing is suitable for ten of its 30 provinces, including Shandong, because of the combination of good biomass availability and network of coal-fired power stations.

As yet, co-firing plants do not enjoy the essential preferential feed-in tariff enjoyed by dedicated biomass plants, although there are plans to change this and make the preferential tariff available to co-firing plants too.  A key issue is to develop a system that would monitor production and other activities in tandem with a new financial incentive.

A further snag is that there are currently no co-firing projects registered by the Clean Development Mechanism (CDM) Executive Board whereas a number of projects for dedicated biomass power plants have been registered.  Hence, coal-fired power stations are still unable to claim funding through the carbon markets for any co-firing innovations at present.

Great  leap forward

History has shown that when the Chinese turn their minds to something, they make enormous steps very fast and with clear plans. The odds against co-firing are stacked quite high at the moment, but a top-down decision could alter the situation very quickly. Perhaps it is only a matter of time before they acknowledge the wasted energy – not to mention earnings opportunities – visible when they pass farmers burning unwanted straw in the fields.